Thursday, September 25, 2014

Life in these United States: Reality (aka Health Insurance Issues)

Recently I was complaining to a friend that being an adult can be a drag sometimes. Those times include: when you realize your car might need several hundred $ worth of work, which means finding time to take the car into the repair shop, hoping they don't rip you off, and then dealing with the bill, or when a doctor's office tries to charge you for something your insurance company should be covering, and you spend far too much time on the phone clarifying the situation so that you are not stuck with having to pay more than than necessary. This second point got me thinking about the U.S. health care system, and how it differs from those in most other countries. Because quite a few of my readers live in countries other than the U.S. (and some of you might be considering a move to the U.S. at some point), I thought it might be interesting to delve into some of the realities of life here because - as opposed to what American movies and TV shows might seem to imply - it is not necessarily the land of milk and honey! (N.B. - This is all based on my personal experience and knowledge, so - as the saying goes - your mileage may vary, or your experience might be different.)

Top 5 things to keep in mind about health insurance in the U.S.
  1. It's expensive.
  2. It is complicated.
  3. Just when you think it cannot be more expensive, it gets even more expensive.
  4. It is illogical.
  5. Making full use of it, and ensuring you are not being charged erroneously is time consuming.
Health insurance in the U.S. is employer-based, which means if you are unemployed, you might have it rough. Another caveat is that often one has to be a full-time employee (working forty or more hours a week) to qualify for certain benefits, such as health insurance or vacation time. Of course, the recently implemented Affordable Care Act (aka "Obamacare") changed health insurance availability to some degree. Additionally, for quite a few years now, anyone poor enough can qualify for Medicaid, while most people over the age of 65 qualify for Medicare. These are, essentially, health insurance programs run by the federal government.
How's your blood pressure? (Source: CDC)
However, for the vast majority of us, health insurance is provided by our employer, whether that be a business, non-profit organization, or local/state/federal government agency. By "provided," I don't mean that your employer gives you a little insurance I.D. card, and says - go use, have fun, you won't have to pay a single dollar. Ha, far from it!

Very few companies fully pay their employers insurance premiums, which means that an employee has a certain amount deducted from each paycheck to help pay for their insurance. This number and percentage can vary wildly. My company, for example, for many years paid 50%, while the employee paid the other half; a couple of years ago the company (thankfully!) increased its percentage 60% and I pay the remaining 40%. The monetary amounts I'm talking about are not inconsequential. (More on that in a bit.)

Depending on the size of the company and what it has decided to offer, an employee's options vary. Sometimes there are only two health insurance options - with differing prices and coverage - while other times there might be several. You can typically make your choice only when you begin working at the company, or during an "open enrollment period," or during a short time frame in the late fall when you are presented with the new prices and updated options. It can be difficult to make a decision, as one never knows what the future holds (one friend recently decided to switch to an option for which premiums cost less per month , but charges more for out-of-pocket expenses for surgeries and the like, and several months later needed surgery, negating any savings on the premiums), and also because deciphering anything health insurance-related in this country requires a great deal of patience and more than a little bit of smarts.

To lay out some specifics, I receive a weekly paycheck, and $74.04 of each and every paycheck goes toward my health insurance premium. How much I earn is irrelevant - I would be paying that much if I were making $30,000 or $150,000 annually. My company offers five or six different health insurance options, and this is one of the more expensive in terms of weekly cost to me, yet it covers more than some of the cheaper options. When you do the math, it means that I am spending $3,850.08 annually just for my health insurance premiums! Additionally, if my company is covering 60% of the cost of this insurance, it means that the yearly sum which is paid for my health insurance totals about $9,600! Additionally, this does not include vision insurance (because why in the world would anyone need to see?!), nor does it include dental insurance (because who the heck needs teeth?!). I pay extra for both of those.

If this meant that I could waltz into any doctor's office and have all sorts of tests done, etc, that would be great, but that is not how the system functions. First, I have to make sure the doctor is "in network," meaning that this specific doctor works with my insurance company. Going "out of network" can have expensive consequences. Second, the insurance company has a complex chart that lays out what they cover, what they don't, what I will have to pay, and what I might need to pay. For example, to go see a doctor costs me $15 up front at the doctor's office. (Some insurance companies structure it so that seeing a generalist, such as a pediatrician, internist or ob-gyn, costs a smaller amount, say $20, while seeing a specialist such as an orthopedic surgeon or neurologist costs a larger sum, such as $40.) However, if the doctor says - you need to have that x-rayed, you need blood work, etc., that's where it can get tricky and expensive. Again, I typically need to find out whether that will be "in network," then I hold my breath and hope it doesn't get too expensive.
Time for a flu shot! Luckily, the place I work provides them.
Each year I have to satisfy a "deductible." This is a sum that I need to cover for anything beyond a simple doctor's visit. Let's say I see a doctor at the beginning of the year. That will cost me $15, and will not count toward my deductible. However, during the appointment the doctor is concerned enough that she wishes for me to have Tests A, B and C. After these test have been performed and the claims processed by the insurance company, I receive an "explanation of benefits" from my insurance company. This document explains the following:
  • The "cost" of Test A is $200, but the rate negotiated between the doctor and insurance company is $70, so that is the amount I will have to pay.
  • Test B "costs" $130, the negotiated rate is $65.
  • Test C "costs" $94, the negotiated rate is $12.
Adding up the 70 + 65 + 12 = $147, and that amount has gone towards "satisfying my deductible." In other words, I have not yet reached my deductible. However, if I then sprain my ankle, and get it x-rayed and the amount I have to pay for the x-ray is $110, then (by adding the $110 to $147 for a total of $257), I have reached my deductible. Then, for the rest of the year any test will cost me 20% of the negotiated rate. Let's say, a test "costs" $400, the negotiated rate is $139, so the amount I owe is $27.80 (i.e. 20% of the $139).

Confused yet?!? Yes, pity the person who has many health problems, or who is in a serious accident, or has suffers from anything serious such as cancer. I have seen massive piles or files of papers - explanation of benefits, bills, reminders, etc - on the desks and kitchen tables of such people.

As you can see, health insurance and health care are quite confusing in the U.S., and it can be argued that it rates rather high as a stressor for quite a few people. As a matter of fact, a disturbingly high percentage (around 20% from what I've read) of personal bankruptcies in this country are caused by medical bills. While the United States is wonderful in regards to many factors, the cost and complexity of health care is not one of those.

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